Asia stocks erase gains as crude oil rebound fizzles
TOKYO: Asian shares unwound early gains on Wednesday, as weakness in Chinese stocks continued and investors turned cautious following renewed selling in recently battered crude oil futures.
Financial spreadbetters predicted a lacklustre start to European trading, with IG expecting Britain’s FTSE 100 to open down 0.2 per cent. Germany’s DAX and France’s CAC were expected to shed a few points and open flat in percentage terms.
MSCI’s broadest index of Asia-Pacific shares outside Japan erased a positive start to edge down 0.1 per cent, on track for a flat monthly performance and down 12 per cent for the year.
On Wall Street, major US indexes each gained more than 1 per cent. All 10 major S&P sectors ended with gains, led by a 1.34 per cent rise in the technology sector, which lifted the S&P 500 to a modest increase for the year.
Japan’s Nikkei ended the country’s final trading day of the year up 0.3 per cent, off session highs but still gaining 9.1 per cent for 2015. But it shed 3.6 per cent in December.
The broader Topix rose 0.3 per cent in thin trade, with only 1.32 billion shares changing hands, the lowest since April 2014.
“We’re seeing thin volumes at year-end as the number of active participants has decreased due to the holidays,” said Martin King, co-managing director at Tyton Capital Advisors.
Australian shares outperformed, rising 1 per cent to mark their ninth consecutive day of gains.
But China’s blue-chip CSI300 index was down 0.2 per cent, while the Shanghai Composite Index was flat, ahead of December manufacturing activity surveys which are expected to show the economy remains sluggish.
Qi Yifeng, an analyst at consultancy CEBM, said Chinese investors mostly worried about the economy, and a potential equity glut.
“Next year, there will definitely be a surge in share supply,” Qi said, citing the expiration of the share-sale ban and reforms that would make new listings much easier.
Also damping investor sentiment, a Reuters poll showed that activity in China’s manufacturing sector is expected to have contracted for a fifth straight month in December. The official data will be released on Friday, and a similar private survey on Monday.
Higher US Treasury yields underpinned the dollar overnight, although yields were off highs in Asia.
The yield on benchmark 10-year US Treasury notes stood at 2.292 per cent, compared with its US close of 2.307 per cent on Tuesday.
On the US two-year note, the yield closed at 1.095 per cent on Tuesday after earlier touching its highest level since April 2010.
The dollar index, which tracks the greenback against a basket of six rival currencies, was up about 0.1 per cent at 98.176.
After touching a nearly two-week low earlier in the session, the index rose to nearly a one-week high of 98.413 on Tuesday. It is up 8.8 per cent for the year, though down nearly 2 per cent for the month as investors pared their dollar-long positions after the US Federal Reserve’s widely anticipated interest rate increase in mid-December.
The dollar was steady at 120.40 yen, while the euro edged up 0.1 per cent to $1.0930. The Australian dollar, meanwhile, slipped about 0.1 per cent to $0.7286 as the renewed selling in crude prices prompted investors to lock it gains on its rise to $0.7303 overnight, its highest since December 10.
The New Zealand dollar was down 0.3 per cent at $0.6848 , after it scaled a 10-week peak of $0.6881 in the previous session. In commodities trading, US crude futures skidded 1.7 per cent to $37.23 a barrel, while Brent shed 0.9 per cent to $37.46.
Both had jumped 3 per cent overnight, taking back ground lost in the previous session as colder US weather forecasts raised expectations of more demand. — Reuters